Partner Article

Xercise4less secures £31 million in equity and debt funding

Yorkshire-based low cost gym chain, Xercise4Less, has announced this week that it has attracted a further £5 million equity investment from BGF (Business Growth Fund) in addition to an increased debt facility of £20 million with Lloyds Bank Commercial Banking and a further £6 million in asset finance and leasing facilities, bringing the combined total for this round of funding to £31 million.

The latest round of funding comes as the ambitious Yorkshire based gym chain, whose turnover has almost doubled in the last year and is now valued at £128 million, realises its goal of taking the brand national.

The Leeds headquartered business prepares to open its first site inside the M25, in Hounslow and further sites are planned to follow in London and the South East.

The last 18 months has seen Xercise4Less open fifteen new gyms bringing the current total to 24, smashing its growth targets laid out in the business’s five year plan. An uplift of 96 per cent in membership takes numbers to more than 180,000, placing the business alongside some of its larger competitors. This week the company was ranked as the 21st “fastest growing private company in Britain,” by the Sunday Times Virgin Fast Track 100 - the first time that Xercise4less has been included in the ranking.

Recently filed accounts for the last financial year show that turnover and profitability have almost doubled in the course of one year to £13.0m and EBITDA of £3.4m, compared to sales of £7.1m and EBITDA £1.7m in FY 2013. Sales have more than doubled year on year for the last three years. The business is on track this year to achieve a turnover of circa £30m and EBITDA of circa £10m.

BGF, which offers long-term capital and follow-on investment, has now invested £12m in the company, after its initial commitment of £5m in August 2013 and a further injection of £2m in May 2014.

Jon Wright, founder and CEO of Xercise4Less, said: “We are less than half way through a five year plan, with ambitions to grow to over 100 gyms nationwide and create more than 4,000 jobs.

“Our growth has really accelerated in the 18 months since BGF’s first investment. Gaining the backing of a minority equity investor has lent us additional credibility, and played a big role in helping us to increase our lending agreements with Lloyds Bank and others.. Having investment backing of this kind enables me to fully realise my vision for the business and drive it forward at the pace it needs for us to further disrupt the leisure industry and strengthen our place amongst the big players.”

Richard Taylor, investment director at BGF, said: “Xercise4Less, led by a strong management team, has been on an impressive upward sales and profitability trajectory and we’re looking forward to continuing the roll-out of their popular low cost model nationwide.

“This is a great example of equity and debt working hand-in-hand to support growth. We are delighted that Jon has been able to secure a complementary mix of funding, resulting in an appropriate and flexible capital structure for the company at its current growth stage.”

Xercise4Less, which has been heralded by the regional media as the ‘The People’s Gym’, was founded in 2006 by ex-rugby player Jon Wright from a single unit in Castleford, West Yorkshire. Having won the National Fitness Awards Budget Club of the year in 2012 and 2013 as well as a number of other awards over the years the brand is recognised within the industry for its innovation and customer service.

Matthew Pollard, Martin Beckett and Saran Lall from Lloyds Bank’s Yorkshire-based Mid Market and Strategic Finance teams provided the enlarged debt facility.

Martin Beckett, Regional Director, Strategic Finance at Lloyds Bank Commercial Banking, said: “The management team at Xercise4Less has built a successful business based around the principle of providing consumers with access to high quality fitness facilities at affordable prices. The latest round of funding provides the business with the capital to accelerate its rollout strategy.”

This was posted in Bdaily's Members' News section by Gabriella Smith .